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Russian Phone Firm May Owe Back Taxes

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The claim against VimpelCom totals $157 million. The news sends its shares tumbling on the NYSE.

December 09, 2004|From Bloomberg News

VimpelCom, Russia's second-largest mobile phone company by subscribers, said Wednesday that it might owe 4.4 billion rubles ($157 million) in back taxes, penalties and fines from 2001.

The stock had its biggest drop in six years. Shares of VimpelCom plunged $8.38 to $30.10 on the New York Stock Exchange.

The tax claim amounts to 2.5 billion rubles ($89.3 million), and penalties and fines make up the rest, the company said in a statement.

Moscow-based VimpelCom will appeal the claim that so far can't be enforced, company spokesman Mikhail Umarov said.

The claim against VimpelCom comes after a $20-billion tax demand on Yukos Oil Co., Russia's second-largest oil producer, as President Vladimir Putin tightens his grip on the economy. VimpelCom's main shareholders are Norway's Telenor and Alfa Group, whose controlling owner Mikhail Fridman, 41, is Russia's sixth-richest man.

"VimpelCom is a clean company, traded in the U.S., created from scratch rather than acquired in state asset sales," said Konstantin Lapochkin, a fund manager in Moscow. "VimpelCom isn't Yukos. And now authorities are coming for it, demanding money."

In its statement, the company said a large portion of the tax claim "relates to the deductibility of expenses incurred by VimpelCom" in connection with its wholly owned subsidiary, KB Impuls. KB Impuls has provided services to VimpelCom's clients in the Moscow region, while VimpelCom-Region services territories including Siberia.

A Tax Ministry spokeswoman said she had no information about the claim.

Dag Vangsnes, a spokesman for Oslo-based Telenor, Norway's biggest phone company, said he couldn't comment beyond the VimpelCom statement. Telenor shares dropped 6% in Oslo.

"This really illustrates the risks that are present in Russia," said Didrik Kjeldahl, an analyst at Fondsfinans in Oslo, who rates Telenor stock "hold." "There have always been difficulties like this in that market and there will be in the future, too. But it's a valuable growth market to be in."

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